Archive for the ‘Venture Capital’ Category

Click on the above image, or you can advance to the Spreadsheet of the Collaborative Economy Funding, to see a multi-tab analysis of funding, which I update on a regular basis. Caveat: This sheet is incomplete: People continually submit new data to me, and early stage funding is often not reported in public.

The Collaborative Economy continues to be a darling of tech investors. In a few short years, these companies have received incredible amounts of funding, totaling nearly $7 billion across 169 startups, with no signs of it slowing. Startups continue to seek investors to raise more funds, and investors are pressured by their own partners to get into the sharing and collaboration space. Here’s a few previews of what you’ll find in the sheet:

This sheet contains ten tabs, with the main data tab having 513 rows, and five dynamic graphs, it includes:

Summary tab

Funding by Date (and year-by-year graph, and month frequency)

Funding by Value in descending order (and graph)

Funding by round type (a form of value)

Funding by Industry (and graph)

Comparison to popular social networks (and graph)

As of today, there’s been a whopping amount of $6,884,248,411 funded in this market

Over the years, I’ve analyzed social network funding and the resulting social business software funding, and can see some patterns that are likely to repeat. Don’t expect most of these startups to succeed, as many are clones in a winner-take-all marketplace. Funding continues to pour in, and I expect us to cross the $7 billion marker in just a few months.

Transportation dominates the funding space, with Uber, Lyft, and BlaBlaCar taking the lion’s share. This is “market one” to be impacted, as there are significant numbers of idle vehicles that can be activated using mobile technologies. Crowdfunding, P2P Lending and other crowd-based currency industries are next, closely followed by physical space, and physical goods. Expect additional funding to follow in these categories.

I hope this sheet provides additional market clarity. You can use this funding data to forecast which types of startups will matter in the coming years. I had created a sheet tracking 2014 data, as I saw a surge in Q2. I am now abandoning that for the above sheet, due to the initial project success.

Social networks were the first phase of digital P2P. They enabled anyone to create media and then share it. The Collaborative Economy is the second phase. It enables anyone to create goods and share what they already own. So, how similar or different are the funding amounts for these two movements? This post provides some insight.

There are many ways to compare industries. I’ve conducted analysis on: adoption rates, attitudes, growth rates, and, in tech-heavy industry, funding rates. While investors have often known to be wrong, funding indicates bullish attitudes based on financial analysis and gut reaction to new markets. It’s a metric we must analyze.

To produce this comparison, we gathered publicly available information about consumer-facing, popular social networks, like Facebook, Twitter, and LinkedIn (and 17 others) to find out how much money a mature market, complete with winners, losers, and IPOs, has been funded. Next, we gathered public data about funding in the Collaborative Economy (Uber, Airbnb, Indiegogo, and hundreds others) to see what we could find.

A few analysis notes:

Popular social networks are reported to have been funded by $5.4 billion over the last decade. Mostly “consumer” Collaborative Economy startups that enable the sharing of goods, services, food, money and vehicles, have been funded $6.8 billion

If you compared, percentage wise, the Collaborative Economy has been funded 26% more than popular social networks.

This isn’t an apples-to-oranges comparison: There are few fewer social networks (we looked at 20) than Collaborative Economy startups (we tabled 497). There is no public data for many social networks that died by the wayside lack.

Often, funding in early stages is not reported, so it’s impossible to ever truly know what the total funding amount for many companies. Early seed and angel rounds aren’t typically reported.

While social networks aren’t likely to be funded significantly greater, I expect that many Collaborative Economy startups are going to receive significantly more funding.

I didn’t tally up enterprise social business software funding (community platforms, social media management systems) as there isn’t comparable software for the Collaborative Economy …yet.

SummaryThis doesn’t mean that all Collaborative Economy startups will succeed. Markets often only have room for three players – not like the dozens of transportation players currently available. It could also mean that Collaborative Economy companies need to be more resource-intensive to lift off the ground. It certainly means that investors, many who funded social networks, are also bullish on this next phase of P2P sharing.

Since my last analysis on July 3rd, 2014, there’s been continued funding into the Collaborative Economy market –where the crowd gets what they need from each other. Investors are infatuated in this market as it provides new supply, disrupts incumbents, using faster technology powered by mobile, social, and internet of things, the Phoenix Business Journal did a recent write-up of my keynote at a business conference, highlighting the market changes.

In just 2.5 months there’s been even more money flooding the market. SMB FundingCircle raised a massive $65m round, followed by big rounds to Rockettaxi to aid the disrupted incumbents, and Fiverr raised a $30m found, as they enable crowd-based tasks to be completed on a two sided marketplace. In these past two months, there’s been $241k invested into this growing market.

Recent Funding in the Collaborative Economy

7/16/2014

Funding Circle

$65,000,000

Money

7/16/2014

Shyp

$10,000,000

Services

7/18/2014

Helparound

$600,000

Health

7/26/2014

RocketTaxi

$40,000,000

Transporation

8/8/2014

Thuzio

$6,000,000

Services

8/11/2014

Fiverr

$30,000,000

Services

8/12/2014

RelayRide

$10,000,000

Transporation

9/4/2014

Breather

$6,500,000

Space

9/25/2014

Jimubox

$37,190,000

Money

9/25/2014

FlightCar

$13,500,000

Transporation

9/15/2014

Sidecar

$15,000,000

Transportation

9/19/2014

EatWIth

$8,000,000

Food

SUM

$241,790,000

Analysis: The Last 9 Mos of Funding
Here’s a breakdown of the 2014 Funding from Jan 1st-Sept 20th:

Total Funding Events: 39

Deals per month: 4.3

Average Funding Per Month $301,052,222

Average per Funding Round $69,473,590

Median $10,000,000

Average funding amount without Uber (outlier) $42,084,857

Average funding amount without Uber and Airbnb (outliers) $27,282,973

2014 Sum: $2,709,470,000

Bubble? I’m often asked are we in a bubble? My answer is yes and no. First of all, unlike the first web boom I experienced in late 90s or social media phase, there’s clear revenues being generated from peer to peer commerce. Unfortunately, you can’t sustain this many competitors in each arena –particularly in the transportation space. I recently told CNBC that there’s only room for three playersin each of these markets: “In the end, the market can’t sustain this many car-sharing or ridesharing start-ups—there’s typically going to be room for three—the most convenient, the cheapest experience and a unique experience,”

[2014 funding has increased 350% in deal size mainly due to large investments in Uber, Airbnb, Lyft, Lending Club, and BlaBlaCar]

Exactly one year ago, the average funding amount was $29m. In July 2013, I surveyed a sample of 200 startups (read full report). I found that 37% had been funded, with startups receiving an average of $29 million in funding. The 200 had received over $2 billion in total funding, which is a very high amount for a largely undeveloped, pioneer market. Interviews with several of the Venture Capitalists in this space indicated that they favor two-sided marketplaces that are scalable and have low inventory costs

[In 2013, average funding was $29 million. In 2014, the average funding amount is $102 million due to outliers, like Uber, receiving over $1.2 billion]

In the first half of 2014, the average funding amount, is a whopping $102 million. The findings are stunning. I’ve not seen this much investment in tech startups for some time. Some data highlights: In seven short months, there’s been at least 24 distinct funding instances of at least $1 million or more in investment funding. Of those, Uber received the lion’s share of a whopping $1.2 billion in investment for global growth and product expansion. On average, $102 million is the common amount, but if you strip off the Uber investment, Airbnb, Lyft, and Lending Club are lower in investment amount, bringing the average closer to $52 million, which is still very high.

Last Seven Months of Collaborative Economy Funding by Amount
Above image is the same data.

Uber

$1,200,000,000

Airbnb

$500,000,000

Lyft

$250,000,000

LendingClub

$115,000,000

BlaBlaCar

$100,000,000

Prosper

$70,000,000

Instacart

$44,000,000

Hailo

$26,500,000

OurCrowd

$25,000,000

RelayRide

$25,000,000

Zopa

$22,700,000

Postmates

$16,000,000

CircleUp

$14,000,000

MakeSpace

$8,000,000

Storefront

$7,300,000

Pley

$6,800,000

SkillShare

$6,100,000

Yerdle

$5,000,000

Traity

$4,700,000

Deliv

$4,500,000

Pivotdesk

$3,600,000

Sidecar

$3,100,000

Cargomatic

$2,600,000

Scoot

$2,300,000

Sidecar

$1,000,000

Data Summary

Total investments from in last seven months: 24

Average deals per month in 2014: 3.4

Average funding amount in June 2013 study: $29 million

Average funding amount in last Jan-July 3, 2014: $102.6 million

Median funding in last seven months: $14 million

Average Funding Amount (excluding Uber) in last seven months: $52.6 million

Total Amount of Funding in last seven months: $2.46 billion

Increase in funding amount per investment in 12 months: 351%

Conclusion: Investors love the Collaborative Economy – But will it bust?So, why are investors betting big on the Collaborative Economy? These scalable business models run on top of highly adopted social and mobile technologies. They offer a high frequency of transactions, with low operating costs. They are also disrupting traditional corporate business models, as they are more efficient by leveraging internet of everything, mobile devices, apps, and payment platforms. Neal Gorenflo reminded me that these startups cause the incumbents to wail in the media, creating incredible low cost PR value, which in turn attracts more customers.

In summary: Investors expect these startups to be highly profitable and are betting down big.

Update: The sample for the 200 startups was collected in February 2013, and does not, therefore, include a few startups that have since been launched. I’ve added a fourth graph at end of the article showing some additional Angel investors who have supports startups not in the original sampling.

Heavy Funding Has Spurred this Market Forward. Across the 200 startups, I have found that 37% had been funded, with startups receiving an average of $29 million in funding. The 200 had received over $2 billion in total funding, which is a very high amount for a largely undeveloped, pioneer market. Interviews with several of the Venture Capitalists in this space indicated that they favor two-sided marketplaces which scale and have low inventory costs. They are basically transaction machines akin to eBay or Netflix.

SV Angel and Benchmark Funded Most Frequently. San Francisco and Silicon Valley-based firms funded these firms most frequently, which coincides with the high concentration of Collaborative Economy startups in the SOMA district of the city. In particular, SV Angel and Benchmark were the highest frequency funders, followed by Incubator/Accelerator 500 startups Andressen and Floodgate, which are located in the Silicon Valley and San Francisco area.

Market Has Received Early Stage Funding. Of the total funding of the nearly 80 startups, most are in an early stage, with the most dominant being Seed round, followed by ‘A’ round. The other category includes non-disclosed personal loans, bootstrapped self loans, and the ambiguously termed ‘Venture Round,’ which could be construed to mean a variety of things. This early market funding, which started to emerge about 3 years ago, matches the funding levels being shown.

Individual Investors Include Hollywood Stars and Internet Veterans. Early stage funding often includes celebrity investors who want to get in on the action, angel investors, and a “friends and family” round of other successful entrepreneurs. Ashton Kutcher has invested in 5 startups in this market, and seasoned internet exec, Keith Rabois, is reported to have individual investments in many startups in this market. We should assume there are other personal loans and investments made that were not apparent in our public searches.

Graphics: Key Investors in the Collaborative Economy:
After segmenting the data, we comprised these graphs, based off frequency patterns per startup.

Above: Individual investors are based off an updated sample size in Feb 2013, while data is accurate, it did not include new startups that were added to this market.

Above, On July 14th, I’ve added the following graph, which includes new investors not in the original sample size, collected in Feb. In all cases these graphs are correct, but they represent different sample sizes. New investors include Mike Walsh and Shervin Pishevar, who take the lead, in terms of frequency.

Methodology and Data Notations

See the full data sample was from 200 startups in the Collaborative Economy. Read the infographic to obtain a summary. Special thanks to the Collaborative Consumption crew, as many of the names were obtained from their site. Of the 37% who’d been funded, we mined public records ranging from Crunchbase, startup website, investor website, Wikipedia, news sources, and press releases to obtain data. We don’t believe this list is complete, but it is a representative sample of funding from easily obtained public sources.

We included the term “venture round” is an ambiguous term which can be used in a variety of ways, in the ‘other’ category, as it’s used both in early stage and later stage funding rounds. Obtaining the exact amount of how much each firm or individual invested is next to impossible, so obtaining frequency, and estimating per round helps to determine a relatively reliable figure. Compounding this complexity, multiple investors are often involved in each round, making specific dollar amounts even more difficult to determine. This information should not be used for official financial advice or guidance, but only for entertainment purposes only.

Which VC invested the most frequently in Silicon Valley Social Networks? Surprise! They’re from NY! This is part of my continue industry analysis of the changing digital space (see all posts tagged VC), but probing which investors are most active –and are bellwethers for finding future growth companies.

Ever wonder who’s behind the backing of some of the fastest growing technology companies? To find out, I created tables and collected public data to list out the specific investors of each of the major social networks, and social media sites, and conducted frequency analysis of the investors to find out. This is part of my continued coverage of investors in the social business space, read the rest of my posts, analysis, and insights to this important group in our industry. One caveat, I’m not a financial analyst, I’m an industry analyst, and this data shouldn’t be considered for investment purposes.

Financial investment data of these social networking companies seems like it’s easy to get, but it’s very unstructured. The data was all over the web, it was hard to find a single repository of information, common sources were press releases, wikipedia, CrunchBase, and corporate web pages. It’s difficult to tell the specific amount each VC put into a shared investment round, even probing through the S-1 filings would not yield the specifics of each investor.

There was plenty of information about how much funding each startup received, but it wasn’t broken down by VC group. This analysis is based of the public available data on investment funding of the following consumer social networks: Facebook, Groupon, Foursquare, Gowalla, Twitter, Zynga, LivingSocial, LinkedIn, Branch, Pinterest, Digg, Reddit, Instagram, Tumblr, Yelp, WordPress (Automattic), and Snapchat. Of these players, only a few had public available data that they’ve been funded. Then, we segmented the investments by individual round, then looked for pattern analysis on which VC firm had invested the most frequently. Here’s the findings:

Variations on Investments Segments VC Strategies

Early Stage Funding Modest. Research found there were over 120 distinct investors, which includes about 50 individual investors or angels. Among them, most investment rounds in A-X had multiple investors in each round. A handful of angel and seed rounds had individual investors. Seed round amount across the 17 startups was a mere $3m, yet the sum of the angel rounds grew to $863m, a big chunk of that amount is Reid Hoffmans multi million dollar investment into Zynga, which in some categories can be considered to be as large as some C or D rounds.

Later Stage Funding Balloons. Across this category of 17 social networks, the largest rounds of funding were within C and D, each over 1 billion. A Rounds across these startups were a sum of $85m, followed by B Rounds of $620m, C Rounds of $1,2b, D Rounds $1,7b, then a tapering off as E of $452m F of $376m and G Rounds of $110m. As usual the later rounds had institutional investors, banks, and larger VC firms. The amorphous term “venture round” (a sum of $2.5b) in this space was often a late stage growth round, which, in my opinion, was used to bolster valuation before a startups material event.

NY Union Square Ventures Leads the Way, Frequency Wise. While this doesn’t account for total size of investments, we found that NY based Union Square Ventures invested in many deals, and had up to 14 investments in social networks over the past years. Like most rounds, they were involved in multi-investor deals, and frequently was involved in majority of A and B rounds. This investor, placed many investments a early A, then came back for B through C after they saw traction.

Highlight: Digital Sky Technologies
While not a frequent investor, Russian based DST (I’ve had a dinner with Yuri to hear his strategy), when they did invest, it was large sums, and large amounts, their current investments include:
Lead investor of Facebook $200,000,000
Partial investor of Groupon $950,000,000
Partial investor of Twitter Round $400,000,000
Partial Investor of Zynga $15,200,000

Concluding Remarks: At first, it’s surprising that the most frequent investor of silicon valley social networks is NY based Union Square ventures, but if you look at the pattern, they placed early bets, saw growth, then double and triple downed their investments. While frequency doesn’t account for total fund performance, it demonstrates the specific strategy some VC firms are playing. On the other hand, Russian Based DST places few bets, but when does, places them big and strong, after seeing growth. Both investment strategies are needed for emerging markets, both for initial catalyzing, then followed by acceleration, then increased in valuation. These patterns help to define the market maturity of a space, and you should use them to identify maturity stages in the markets in which you’re acting.